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Hierarchy of Software Licensing Terms

“Copyright has two main purposes, namely the protection of the author’s right to obtain commercial benefit from valuable work, and more recently the protection of the author’s general right to control how a work is used.”

A Plethora of Resources

It is becoming critical for organisations to understand whether the written guidance on licensing relied upon to inform IT decision makers are considered influential or ‘binding’ by the software vendor.

An organisation may often refer to written guidance and specific terms extracted from a wide range of publicly available information published by Microsoft (and other 3rd party commentators) to support their interpretation and implementation of Microsoft Software. This becomes critically important when attempting to quantify risk (in preparation or in response to a vendor audit) or in assessment of the ‘real’ total cost of ownership of new technology choices.

An organisation’s hardware environment, software deployment footprint, processes and infrastructure topology and technology choices can all be impacted by Microsoft’s commercial licensing models. This may affect the outcome of a vendor ‘review’ or official audit or contribute to unmitigated risk when considering a merger, acquisition, divestiture or sale.

Accordingly, an organisation’s IT department may have referred to guidance from a plethora or resources to inform their approach, including but not limited to:

Microsoft Business and Services Agreement (MBSA)

Volume Agreement – Master Agreement

Volume Agreement – Enrollment

Product List

Product Use Rights (PUR)

Microsoft Websites

Microsoft Training Resources

Microsoft White Papers and Licensing Briefs

Written statements by Large Account Reseller (LAR) or Enterprise Software Advisor (ESA) or Software Asset Management (SAM) and IT Asset Management (ITAM) or Independent Consultants.

In the current economic climate it is increasingly important to understand what software use terms, definitions, and explanatory guidance are ‘binding’ on your organisation. If this is understood, it is possible to start understanding the total and extended risk for your organisation. It is now estimated that 1 in 4 dollars spent on IT will be aligned to risk management.

The Hierarchy of Binding Documentation

The most important documents to refer to our the Volume Agreement(s) your organisation has procured licenses through and the Product List and Product Use Rights. These contract documents are considered by Microsoft as ‘binding’ upon your organisation.

It is important to understand what Microsoft Volume Agreement(s) your organisation has signed with Microsoft. This may include, but not limited to, Select Agreement(s), or Enterprise Agreement(s) or other specialist Enterprise Enrollment(s) along with any signedcontractual amendments/exceptions.

These documents, in conjunction with the relevant applicable releases of the Product List(s) and Product Use Rights documents for your deployed software, are your bespoke canon to understanding the appropriate software use terms for your deployed (and planned) software footprint.

The diagram below illustrates the subsequent precedence of the Product List and then illustrates the hierarchy of software use terms within the Product Use Rights. Universal License Terms will remain in effect unless explicitly retracted or amended as specified in either the General License Terms or Product-Specific License Terms and Additional Terms within the Product Use Rights.

Getting a view of all applicable terms involves a ‘little bit of reading’ (I use this phrase lightly) especially If you have both current and prior releases deployed or are trying to map existing footprint versus post-consolidation, or future requirements.

The diagram below is intended to give a ‘high level’ top-down view as to precedence of ‘binding’ documentation. While not a definitive guide for all situations, it provides an overview of the hierarchical precedence of Microsoft licensing documentation and distinguishes between ‘binding’ and ‘non-binding’ advisory documentation from Microsoft and 3rd parties.

While its recommend to look at the source documentation, as an example, the ‘License Mobility’ rules are further amended and defined at the Product-Specific level.

A Comprehensive Approach

Ultimately, appropriate licensing resources should be combined with a systematic approach to discovery, metering, management, analysis, optimisation and negotiation strategy to deliver the returns your organisations demands of It’s IT.

A systematic approach could include, but not limited to:

Balance of extended benefits and total cost of ownership against Vendor “lock-in”.

Awareness of “lock-in” when reviewing procurement models.

Awareness of associated rights and benefits aligned to vendor licensing and maintenance programmes:

Awareness of associated ExtendedSoftware Use Rights

Awareness of associated Product Licensing Dependencies

Awareness of requirements for accessing Extended Functionality

Awareness of requirements for special Rights of Purchase

Comparative analysis of available Software procurement “Packages” and “Suites” reviewed against individual product/component based procurement.

Understanding Impact of respective Ownership and Service Levelsof Service Infrastructure from Service Providers.

Understanding required accreditations and reporting obligations of Service Providers. Procurement Options dependent on the Service provided.

Access to in-house expertise (not white labelled) and resources to support multiple vendor environments.
(Some SAM Service providers do not have in-house knowledge for Multiple Toolsets or vendor licensing models)

While some SAM Service providers may recommend a toolset or combination of toolsets, are they inherently toolset agnostic?

Secondly, do they have the global vendor relationship to access a better price (and support) for discovery and metering toolset(s).

If your organisation is global, a SAM Service provider with local teams to access your worldwide location(s).

Vendor Negotiation Support – look for a provider with a global reach. This will reveal intelligence across regions and vendor subsidiaries in terms of available exceptions and discounts.

If you would like to have a brief exploratory conversation, in confidence (or under NDA) please drop me an email or contact me on Twitter

A Question of Interpretation

As exemplified from this extract from the Product Use Rights, explanations within the binding documentation are often ‘limited’ and indeed, Microsoft themselves may be unable to refer to wording, explanations or definitions solely in binding documentation (Product Use Rights or Product List) when seeking to explain (or enforce their view).

Microsoft does provide guidance that where official contract definitions are unavailable that the contract terms should be interpreted under ‘generally accepted officially recognised English words defined and protected within’ but may ultimately determine unilaterally whether an organisation has used the software in a way that conform to the limited guidance within the binding contract documents. There remains no independent regulator for the software licensing industry (as advocated by www.clearlicensing.org)

It is the personal view of the author, that an organisation should ensure that the technical reality conforms to the reasonable IT industry interpretation of the terminology of the publicly available binding documentation (where specific vendor definitions are not publicly available) of the Vendor. However, this will have limited impact If the vendor takes a different perspective.

Advisory documentation rarely refer to source ‘binding’ documentation like the Product List or Product Use Rights and increasingly, it should be recognised that Microsoft licensing briefs, white papers and training resources, and 3rd party commentators, while useful, are not contractually binding documentation.

As an example, the Microsoft ‘Multiplexing Rule’ (see previous article)was created to protect and maintain a proportional and scalable commercial licensing model; to ensure financial protection for the software vendor for their server product(s) that will not limited by “hardware or software you use to pool connections, reroute information, reduce the number of devices or users that directly access or use the product”.

[Ref: Product Use Rights, April 2013, Page 11]

However, the ‘Multiplexing Rule’ when reviewed solely on the limited guidance provided in ‘binding’ documents like the Product Use Rights could potentially be used to support the widest possible interpretation of those terms. Microsoft can apply this logic unless there is an explicit exception sourced from binding documentation. Microsoft will not have to consider written terms, explanations or exceptions sourced from non-binding sources (even those written by Microsoft) even If your organisation may consider reliance on Microsoft advisory literature to inform their software deployment as fair use.

As a hypothetical example, if a member of the public accesses a public website and enters information into a web portal of an ‘eCommerce company’, it could be deemed to “access or use the product” under the ‘Multiplexing Rule’ if that data is subsequently used by some internal SQL Server(s) for internal business analytics by the eCommerce company; the general public could potentially considered licensable as an ‘external user’ and licensable for the ‘access or use’ of the internal servers use for business intelligence.

While it may seem unlikely to your IT or Security Team that a member of the general public would “access or use the product” when SQL is deployed internally for soles purposes of business analytics of (for example, analysis of anonymous and aggregated user data – by internal eCommerce staff); the overarching precedence of the Multiplexing Rule as a Universal License Term within the Product Use Rights and ‘limited’ guidance and definitions within the Product Use Rights or Product List could potentially support the ‘widest possible’ interpretation by the Vendor (and often does).

* It is unclear how this interpretation would impact the fair use of SQL 2012 Business Intelligence Edition sold and commercially licensed only on a Server/CAL metric to eCommerce organisations.

Final Thoughts

While it is accepted than many Microsoft licensing briefs, and websites may state that they are to be used as a ‘guide only’ (while often quoted by the Microsoft subsidiary to support their own view), the customer must ultimately look to the ‘binding’ terms and extrapolate how this could be interpreted, implemented and controlled for their current and planned environment.

It is now, more often than not, that non-binding advisory documentation is of limited influence unless it directly supports the ‘current’ view of the vendor. (There is no independent ombudsman or regulator to adjudicate that interpretation) . It is therefore recommended to extrapolate the ‘widest possible’ risk assessment of vendor interpretation of your deployed software footprint when evaluating and seeking to limit risk and cost associated with enterprise software.

About

This website is a way to give back to the licensing community and as an information resource for all customers that work with Microsoft software and licensing. I hope you find it of value.

If you would like to book an in-depth Licensing Workshop / Microsoft Strategy Workshop please drop me an email or connect with me on Twitter

Tony lives with his wife in Oxford, England.

Disclaimer

This document is provided “as-is”. Information and views expressed in this document, including URL and other Internet Web site references, may change without notice. This document does not provide you with any legal rights to any intellectual property in any Microsoft or other Software Vendor product.

Please be aware that nothing on this website constitutes specific technical advice. Some of the material on this website may have been prepared some time ago, may have errors, and may have been superseded. Specialist advice should be taken in relation to specific circumstances.

The contents of this website are for general information purposes only. Whilst the author(s) endeavour to ensure that the information on this website is correct, no warranty, express or implied, is given as to its accuracy and the primary author and website owner or it’s contributing Authors do not accept any liability for error or omission.

The contributing authors and owner of the website shall not be liable for any damage (including, without limitation, damage for loss of business or loss of profits) arising in contract, tort or otherwise from the use of, or inability to use, this website or any material contained in it, or from any action or decision taken as a result of using this website or any such material.

The information presented herein is intended exclusively as a guide offered by the author(s). The publishers product use rights, agreement terms and conditions and other definitions prevail over the information provided herein.

7 thoughts on “Hierarchy of Software Licensing Terms”

Volume Licensing is getting a real pain for me and makes me feel that a “normal” IT guy can’t understand every singe bit of it.
I’ve read the PUR, the Volume Licensing Guide and almost every official document from Microsoft and I’ve also spoken with Microsoft(who couldn’t answer my questions at first) and partners.
I’m really thinking about only buying OEM licenses as it takes much less time and money than understanding and managing Volume Licensing.

Now to the positive: Your blog is really great and helps me very much; I’m just sad that I didn’t discover it earlier. 🙂

License mobility rights through SA are a real change to the way MS has traditionally licensed products, and the implications are still to be thought through properly as SA can’t be novated although it can be ‘reattached’ within an EA. However if you have no EA in which to purchase the EA, then you are stuck! I hope MS come up with a solution to that one soon.